LAUR - Earnings call transcript Q3 2021 | Laureate Education, Inc.

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Operator

Good day, ladies and gentlemen, and welcome to the Third Quarter 2021 Laureate Education, Inc. Earnings Conference Call. At this time, all participant lines are in a listen-only mode. Later, we will conduct a question-and-answer and instructions will be given at that time. [Operator Instructions].

conference recorded. this reminder, a is being As I to of Adam like to Finance. conference over hand the Morse, would now Senior Vice President

You may begin.

Adam Morse

call thank us Third and for XXXX to today's Quarter morning, Education's discuss Good Results. Laureate you on joining

Eilif the Officer; Chief Buskirk, Financial are Rick President Officer. and Joining me today Serck-Hanssen, on Chief call Executive and

Our of laureate.net. at our release available the on is press website earnings Investor section Relations

to remind The applicable not the the to information limited U.S. have is securities website, we to within guidance we supplementary but also financial We that a our statements referring call. posted including, will be the operational laws. and and during today webcast like presentation today's some will available to, call constitutes you a being be of are meaning of recording forward-looking providing the call. which complete after I'd

to Forward-looking factors to any our and the therefore, at statements as XX-K filings are uncertainties earlier those differ are expected. change expectations Form report may from this on subject that actual may results time, could XX-Q Securities materially with as Commission, cause we the results risks our actual U.S. materially and morning, well annual differ our that disclosed and with filed in made Exchange from SEC. filed our other Important

this statements. all forward-looking forward-looking and call, conference we of as expectations update undertake date any addition, In obligation the statements are current based of no to on

that, Eilif. their over turn debt in related also free discuss me press are we GAAP call total cash that measures among to of the to presentation. or adjusted supplementary our and and non-GAAP and and reconciled counterparts detailed With release margin, Additionally, let others, EBITDA cash net including, its flow,

Eilif Serck-Hanssen

is good you, hold we The taking of morning, and year the initiated during Thank agenda strong driving the first half results. and growth Adam, everyone.

of XX, us volume the Mexico, cycle. at in of XXX,XXX In prior intake. September a we Peru, greater new year enrollments X% momentum versus year enrollments and intake the first during enrollments with experienced than puts students third their enrollment today September half increasing the their new up These We strong the our demonstrate XX% year-over-year, turn XXXX, robust, quarter return versus the resiliency come intake the prior of secondary remarkable third operating during smaller pre-pandemic versus results were quarter completed growth strong have up of quarter our XX% continues making year. for the levels guidance ahead XXXX. The which In raise new was the performance led cycle just us on results XXXX. financial year intake growth of saw model. business which Total for full expectations, our in third large to increasing were primary to in our during our XX% XX%

of brief Let me transformation portfolio our sheet and recap a now related balance provide actions.

We Peru. including team of We past footprints the and learning. assets of through our creation brands, in intend highly of to trading our initiatives, market a a years the acceleration and value closing additional growth of learning set value several the physical continue shareholders. significant value best-in-class our gap value over our quarter, returned of divestiture The net trends I'd the shareholders Mexico completed XX, undertook University. like and During the Spanish-speaking markets, education of maintaining forma to of Walden the for to take of over third Latin favorable by the is we is revenue focused cash to the create management advantage strong way digital remain leading drove our higher in Board our assets in to digital trajectory and intrinsic position divestiture leader focused The the hard-to-replicate education between shareholder What actions Laureate for $X.X October billion lift and call the unparalleled underpinned now while secular our pro America. position million. capital higher $XXX stock. we a best On in with both new to we committed believe

As a from transformation recent line or high years. gone a to to accelerate in into single mid-single the result, digits expect top Laureate digit has we years. through our in digits coming even double growth substantial the

both free We cash our transformation of the attracted of higher our investors, of debt in countries new and Since each digital and respective education both in increased this the and Laureate below scale half market conditions Peru. private our become quality margins XXX,XXX have also in students of down the we have institutions market Peru. and The well own in the and growing in among Over more in served approximately in paid people. see significant universities markets has Mexico most the participation than has a Participation conducive in private flow we regulatory with remind population me operations, dynamics focused interest student Mexico and significantly headroom Mexico both highly thus education are you is by generation. let million Peru. clear growth. briefly XXX population and We with and are attractive the very large country. but leader markets. our markets, at still are the operator levels the are Both for sector, their Mexico in developed and higher combined is and education Laureate a to in providing the Peru, combined reputed leading brands rates higher

was robust our the investments digital are we of our launches and were at campuses. we fueled years, teaching be all our our future XX% robust XX% growth and online offerings in by near-term new Over across freeing our a Consequently, delivered #XX, outlined XX% Through hours traditional teaching and to delivered growth thus pandemic, the as segment. program technology institutions to expected well be as prospects, online. very the Peru, in medium-term Post-COVID hours post-COVID our environment. Mexico past to XXX% significant digital and Pre-pandemic, capacity normalization, capabilities. teaching around face-to-face of X a existing content-rich significant made have online in for as and up in in recovery campus on Slide anticipate accelerated growth undergraduate

Laureate remind me the enablement our more let digital that has growth you Finally, efficient. made of agenda much capital

prospects. to by business any cash Laureate's be in funded investments Our is accretive very by model cash fully flows. generated and encouraged I be growth future free will internally continue

our of access call providing third We year-to-date education. and the over increased communities further have quality Rick a we detailed in now believe Mexico well Peru Buskirk will by our affordable the as performance I vision the best and rates as growth financial distribution a and and to to omnichannel upgraded overview of the turn that students brands team, more to allow our guidance us powerful Rick? management quarter right revenue and lift the transform lives the outlook. to network will for

Richard Buskirk

Thank much, Eilif. you very

factors our Before running performance. through the results, of I that want investors impact to quarterly X remind

Higher education seasonal a is is business. First seasonality.

The is and Hemisphere cycle cycle a a for third primary intake the which market, represents quarter market. Southern Mexico, a Peru, intake Northern for smaller Hemisphere

This of first of in in year-over-year approximately This from COVID-XX quarter, half Peru in of pandemic, recall may to recognized in the in revenue in XXXX earnings year. quarter the for XXXX. resulting reverse skews more the year, you million QX QX. last and our reversing revenue million classes begins related earnings prior approximately less start timing $XX versus the to due second as certain of with were the last difference and year, pushed related resulted $XX of comparability itself to this discussion and our Second, performance remainder

move was which adjusted financial the EBITDA majority related provided months adjusted and was both $XXX on performance the Revenue million, and starting on of we to the EBITDA guidance very $XX controls. now the Let's tight in quarter ahead million. for Page third momentum the was pleased to that business, the strong are cost of third coupled growth continued with, Revenue The in XX. quarter, the were ago. with X we outperformance

increasing year for As a are result, we XXXX. full our guidance

On which results prior The were was our up XX% to we in costs expect by return the increased still return by year third of for on impact, this XXXX. Those fourth the Peru led associated adjusted increased third with been the half as addition, was enrollment total readying growth driving to the and the XX% operations XX%. In retention, improved in strong experienced year-over-year. revenue EBITDA strong year, significantly XXXX basis, to the expected negative revenue. now face-to-face versus constant basis up EBITDA and revenue quarter driven we incur at of semester. academic by quarter, the revenue XX% intakes comparable quarter have costs for cycle first year-over-year trends the comparable and in a and operations X versus Mexico favorable reversing we campus third adjusted currency, at third early quarter during pushed calendar experienced certain quarter were for for campuses Adjusted a during quarter for performance constant cycle the a and to and the Peru year. revenue in and X The growth XX%, XX% prior of respectively. currency, X%

to market. intake primary trend completed continue coming just positive that expect the that We favorable following in the in quarters

growth year, XX%, our for through and Moving at and now comparable versus and was constant X% prior by months by of results, year-to-date increase for resulted at September of currency, driven and half efficiencies. an performance up EBITDA on and with strong impacts, revenue in still basis basis calendar first on Adjusted EBITDA September When operational G&A adjusted combined increased XXXX the of revenue performance academic X corporate a year-to-date still results. comparable X% the to our currency, a adjusted constant overall XX%.

constant additional all some are starting Page on of versus Let me note XX. now comparisons and the Peru, basis. with organic Please currency that provide on and performance prior color Mexico year

results completed Mexico. intake for with were year start very Let's the Mexico strong. and its just primary

September up enrollments prior were through versus during XX% intake year. and New the

year-to-date with intake, volumes a retention, from increase validating of from this Mexico. Increased This much XXXX quarter. intake and combined QX The scholarships and complete, X% enrollment of reported trough partially the new year-to-date resulted the in prior in versus up discounts a versus required we As in was through improvement continued with as of a September offset X% carryforward X-point have quarter discounting X% enrollment performance result of that period. during higher increased pandemic. by Mexico's reference for X% up new levels is in impacts the enrollment through began last XXXX, growth levels the come period the pre-pandemic is now the enrollment strong we of up pandemic. point, total September Revenue of

go-forward a abate the to basis. We to CX experienced focused system that our those cohorts that those during for continuing quarters to of we are optimize starting see move are large the just effect coming intake and carryforward through level. now discounts and on move normalized expect to on more the do impact revenue We see as a to we our

Finally, expenses. adjusted of for was comparable XX% growth revenue basis, resulting from year-over-year timing EBITDA quarter up on and the a

to XX. transition Peru now Slide Let's on

improved For the XX% who first have year, versus the X third plus the the timing we strong XX%, currency driven occurred September XXXX that versus timing to and Total smaller enrollment the trend the and retention. prior a revenue the in increased Please were driven increased an of secondary were to for an pandemic are Revenue seen the out note year-to-date discussed from XX% in $XX reference, continue resulted basis, many X% year-to-date up XX% studies. enrollments intake prior intake, favorably and versus double-digit earlier. same XX% on began by months million are increase. the when compared constant the XX% a to September strong of by of of academic results EBITDA the quarter enrollments year-over-year third enrollments up increase quarter impressive improvement the pre-pandemic new as adjusted XXXX. quarter Adjusted up rates was and XX% new The of students as intake adjusted last Through favorably ahead quarter, for EBITDA by the calendar which period were year year, a increase respectively. Peru year, during impacted with returning retention as dropped prior Year-to-date levels. their year. enrollment for

sheet on discuss briefly our Page position now balance XX. illustrated me Let

cash of billion total were XXX As net and shares a position in XX, approximately of we shares. September outstanding $X.X million were

Walden of quarter the sale the completed we end. at quarter, third the drove During large balance which University, cash

are escrow the due letter balances $X.X $XXX and sale million prior Following related including to to of in XX, Walden, debt the $X.XX October XX, sale University, expected of fees of estimated approximately as to distributed The both cash sales, of and credit shareholders $XXX cash related on taxes a and University. we Walden and million share. billion on release prior September the a approximately the Walden of XXXX, or of to account, approximately

that fourth letter the the the paid We taxes will quarter escrow the credit in of majority and and expect realized during of XXXX will be and fees amounts XXXX. of be

those position at items Our is $XXX quarter for adjusted million end. net cash approximately

to guidance, move on XX. starting let's Page Now

our On is the million for the first increasing guidance $XX EBITDA. and following revenue XXXX positive at recent intake period, strength enrollments, year midpoint of months and total XX,XXX growth results by X million of $XX momentum its adjusted Laureate the full for our

between approximately be XXX,XXX to that handing full $X.XXX you million. updated and and $XXX to guidance Revenues Eilif, million it is our EBITDA total my $X.XXX is remarks. are I'm as estimated And be billion. estimated billion are enrollments follows: that, $XXX year for XXXX, to to adjusted students. with between estimated comments. be back closing in operations concludes continuing For

Eilif Serck-Hanssen

a you, transformation, quality company and will a At Latin The products has in America emerging operating digital and the education pure-play The any that of BXB financial and our hybrid participants. believe and are formats, EdTech. powerful our existing variety with model omnichannel are in into market resulted take that areas Laureate IP online to compelling we serve Operator, delivery. Spanish-speaking Thank as our we of allows leader new platforms education well the future. addressable scale face-to-face, to questions a all including digital which our COVID-XX proprietary expand fully now experimenting us we at our are Rick. same remarks, prepared strategic attributes, happy we stakeholders market-leading in deliver and concludes time, to in in from and accelerated such pandemic distribution and now leveraging by with the a transformation

Operator

Instructions]. [Operator

comes of Martinez question Javier Stanley. Morgan first Our from with the line

Javier Martinez

So Both Wow. impressed at margins I XX% particularly, impressive. quite was and listen, Peru with quite results increasing volumes XX%.

students much of expect teaching I already I'm So online. you with capacity and is leverage the you both installed margins. increase perspective is you some can know trying -- on the But and also operating I delivered -- limit that utilization. to so know students metrics us can XX%, volumes for XX% what don't that hours if have What gain still XXX,XXX where share and how capacity? because increased margins? you

Eilif Serck-Hanssen

Javier, course, We're students this with is pleased and our as convenient was Eilif. COVID very of expansion addressable from facilitating online our recovery quarter impacted the offering the a of But very capabilities are by quarter. postgraduates. it favorably an is market also pandemic. Peru And working for in

from when in we raising do tailwind COVID. as So are we the to a believe rate well trajectory growth Mexico, the Peru in even in normalize as for you

of online. have fully terms impact In operating margins, our from a we favorable

all will be year, campus next As for ready some we of to there fully additional facilities face returning face. to our are expenses getting

capacity, important a delivered pre-pandemic, digital. versus online, headroom online our are of environment of topic. that enabled to facilitate incremental add of CapEx the we really in face-to-face that. XX% the we to grow a physical that delivered and depending being going we and to forward, which having the have by XX% hours which close really, delivery doubling to capacity significant meant total us between programs XX% total a environment our online, from terms means plant hours without steady-state gives of Post-pandemic, in which on capacity our Pre-pandemic, institution, In XX% will somewhere was

as see any as capacity in given environment to questions products. our of online fully your plenty campus delivery was a there online -- there well welcome pause end. hybrid I'll if have we and our students So from follow-up

Javier Martinez

Yes.

So already there. are you

in utilization? level increase trying absolute do have is increase the that So or that find what percentage the same already hybridity. of amount the in the you're facility? going students? the percentage XX%, is what assuming on-campus of of What capacity both you students because in of on-campus, XX%? to of I'm increase the are XX%-XX% the utilization So What the you is to face-to-face This forward, that, still the of -- to with we XX%-XX% Are level capacity total room the continues to out.

Eilif Serck-Hanssen

No, no, very fair.

to are quick just right So we in now, at teaching a reminder, of say, as virtually online because environment. all all an XXX% of -- online done or our our is

needed except that the degrees. up campuses work haven't is specialized certain lab We opened some in for

right So operating online. on be But to XX%. we the manner. XX% between XXXX, XX% pre-pandemic, we'll XXXX, we're and way the to think now, somewhere is, think XXX% I institution, had it in close about in digital depending a

that another So XX% we that as versus XX% a means call plus/minus incremental midpoint. That XXXX. get capacity

probably XX% which -- have We capacity having and the grow -- added we And volume. in face-to-face means physical very in by had XXXX, add we to spare plant Peru similar Mexico. XXXX, are environment approximately without in have XX% XX% we in in in we dynamic can that

Operator

Our next with Rosenbaum question of comes from Stifel. Shlomo the line

Adam Parrington

It's investments Or margin over making to of XX% these sort you are Adam expect expectations do the necessary capital be X% the term? What organic -- margins you will for do and investments? Shlomo. revenue And expand it when growth to expect on the medium drive dilutive? margin to

Eilif Serck-Hanssen

of The hybrid again. is to described plenty growth have improved delivery. system capital through utilization and light. But the we Eilif capacity in just because of is this Adam, Javier, online I agenda very as just

continue headwind into from recovery, is -- is us vector that caught us of that we XXXX when XXXX have and to benefit before certainly pent-up speaking XXXX. we about vector the up the of could COVID in demand, benefit most So you're growth, which expect first COVID and

in content-rich and already quality online all lever capabilities those ensure is students. online, to environment second The and of growth for online invested we've

little there, this investments very innovation is to to So although position. leadership incremental space we to continue needed in our maintain commit

is growth to are all The sure programs of that our make third all campuses. lever at

we nursing make program if to that one the have a that across network. available lift want campus, shift to So in and we consistently

over be course, some and meaningful we -- CapEx any associated in developed couple because of we've equipment. of are of So then, may again, that Laureate light to there's facility increasingly lab solution And next out there And investment of But don't proprietary way also for foresee BXB that Examples a and other universities. education investments with that internally we IP relatively using products years. a lot or to a to we an proctoring industry-leading opportunity that support the is license an as important. becomes a network. in sell online us the manner

So that piggybacking made drivers. the we've investments again, Laureate serve just sources other are those But of to from growth are students. we already

Operator

[Operator Instructions].

question Our line of next [Matthew the from Nagree] with comes [UBB].

Unidentified Analyst

Corp Congratulations to designation, on one the about had the and partly guidance results. the which good B benefit I company raised from. the question used

was I think it dropped.

what a at the it for what will it you sustainability that? company? mean try for corporation? last does interest questions. could that this Does status to could your a public the also And of benefit the have the means as mean first, And element, context you sustainability confirm you is diminished So to strategy is, it in linked explain question which

Eilif Serck-Hanssen

[Matthew]. you, Thank

and We are plans benefit an corporation, a there to change public that. is no incorporated as PBC,

that contrary, that environment, appropriate we are but to discontinue a to have that sustainability improved And as the not does certification the and very you we on To by on vote X deliberate announcement X this relates share, big During metrics mean and longer B governance our are governance. the a the working when to social the we yesterday Corp not as committed sure we agenda. certification the transformation structure we company. published a and saw, process, it Laureate, well the ensuring as no we as controlled make path ESG being of did made agenda being

advance Laureate to more are ESG very in So and agenda the of steps we manner these all this to of come deliberate a area. in taking

Unidentified Analyst

on a have this. follow-up I can If

reports I In reporting, line of time that were I say come, remember you terms used some mean more publish of have that can on you to to excellent. that? when we impact the a

good I tell. think a got you to story

milestones So what all this. would that be, the yes, could we expect through

Eilif Serck-Hanssen

that to execution Yes. be to transformation its of impact being and focus reporting, as countries going the opposed XX as given X countries, paused portfolio I view The enormous the and from review. of its would eliminated, Laureate

we So all be the serve company. purpose-driven be -- are continues for in our And there no a and to no stakeholders. good case. change that and DNA to There our commitment of is is our here

metrics provide management about. team this is all of So update will finalized, we something with the and we revised them Board will the deeply and our more are share investors. care the when But that

Operator

queue. [Operator your Instructions]. conference call. participation. questions I'm concludes Ladies you this the no in further gentlemen, for showing and Thank today's

may You disconnect. now

Laureate Education (LAUR) 6 Nov 212021 Q3 Earnings call transcript